China turns screws on Bitcoin with third party payments ban

The emperor’s-new-clothes world of Bitcoin trading suffered another major blow this week after reports emerged that China has banned all third party payment providers from offering clearing services for digital currency exchanges.

The Middle Kingdom’s central bank, the People’s Bank of China (PBOC), met with over ten payment service companies to provide more clarity on digital currencies.

The bad news for Bitcoin users and investors is that those payment providers have been ordered to cease their involvement with all digital currency by Chinese New Year (January 31), according to Bloomberg.

The PBOC’s hardline stance comes just over a week after it issued a statement claiming Bitcoin is not a currency and therefore banks and other financial institutions are forbidden from any dealings with it.

The central bank has also stopped traders from pricing and exchanging goods and services for digital currency.

The December 5 PBOC pronouncement had left the door open for individuals to continue buy and sell the digi-money, but if the reports about its latest missive are true, there aren’t many options left for doing so.

Already third party payment provider Tenpay has confirmed to the Global Times that it will stop Bitcoin services.

Individuals in China could always bypass the exchanges to buy direct from Bitcoin miners like innovative datacentre owner Asicminer, although many may be reluctant to do so.

The PRC plays host to the world’s largest Bitcoin exchange, BTC China, and has been responsible for much of the surge in interest in the e-money, so this week’s news has unsurprisingly hit the industry hard.

BTC China was trading at a little over 3,000 yuan (£300) yesterday compared to over 7,000 yuan (£700) at the beginning of the month, although it has recovered slightly since.

There was still no official confirmation on the news from PBOC at the time of writing. ®